THE GROWING IMPACT OF ROBOADVISORS by Cameron Williams
Just a few years ago, there used to be a running joke about robots taking over the world. Back then, if I were to say that robots would be the norm for how we manage our money in the future, no one would have taken me seriously! Today, in its most literal sense,
• How much investing experience do you have? • How soon will you need the invested money? • How tolerant are you of market volatility?
technology-based wealth management
• How comfortable would you feel if your
is actually starting to take over many of
portfolio dropped 10% in value in the
the mundane tasks related to how we
short term?
manage our money. These technologybased money management tools are
• What is the primary objective of
called “Robo-Advisors,” and they already
your investments? (growth, income,
represent a nearly trillion-dollar industry
maintain value, etc.)
within investing and wealth management.
• Do you have other invested assets?
WHAT IS A ROBO-ADVISOR? Not to be confused with a walking, talking
These questions are used as binary
robot, a robo-advisor is a technology-
indicators to the robo-advisor algorithm.
based algorithm that builds a custom
Your responses will direct the robo-advisor
investment portfolio for you based on
to build a portfolio that is in your best
a few common investing questions.
interest and customised to your investing
The algorithms are built with the aid
style based on your responses.
of financial experts and tech gurus, to automate some of the basic tasks in
For example, you may be a young
wealth management.
investor just starting out and looking for a diversified portfolio with moderate risk.
Here are some example questions asked
This will be noted upon answering some
when setting up a robo-advisor account.
investing questions, and the robo-advisor
These questions help the technology-
will automatically build you an investment
based algorithm automatically customise
portfolio that is well-diversified among
an investment portfolio for you.
different companies and investments, as well as create a portfolio with moderate risk tolerance.
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Examples of some of today’s reputable robo-advisors today are: • Wealthfront • Betterment • Acorns • Wealthsimple Many of these robo-advisors give their clients access to financial experts in case you have a more complicated question. In short, robo-advisors save customers and investment banks time and money.
It’s no question that robo-advisors make investing more convenient, costeffective, and less time consuming to manage.